WARRANTS

12 Months Ended

Oct. 31, 2023

Warrants

WARRANTS

NOTE 14 – WARRANTS

A summary of warrant activity for the years ended October 31, 2023 and 2022 are presented below:

	Number of Shares			Weighted- average Exercise Price		Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at October 31, 2022		2,149,000		$	4.52		9.63	$	2,440,110
Granted		737,656		$	3.57		5.00	$	-
Exercised		-		$	-		-	$	-
Expired/Forfeited		(315,000	)	$	6.62		8.46	$	-
Outstanding at October 31, 2023		2,571,656		$	3.99		7.50	$	-
Exercisable at October 31, 2023		1,959,365		$	4.45		8.33	$	-

	Number of Shares		Weighted- average Exercise Price		Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at October 31, 2021		47,500	$	6.11		6.90	$	289,500
Granted		2,101,500	$	4.48		10.0	$	-
Exercised		-	$	-		-	$	-
Expired/Forfeited		-	$	-		-	$	-
Outstanding at October 31, 2022		2,149,000	$	4.52		9.63	$	2,440,110
Exercisable at October 31, 2022		1,940,242	$	4.37		9.62	$	2,403,058

On July 21, 2022, the Company issued Mr. Sinnreich (a former executive) a cashless warrant to purchase an aggregate of 200,000 shares of common stock in connection with Mr. Sinnreich’s employment agreement. The warrant is exercisable for $6.80 per share (the closing price of the Company’s common stock on the date of grant), until the tenth anniversary date of the date of issuance. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 2.91%, (2) term of 10 years, (3) expected stock volatility of 144%, and (4) expected dividend rate of 0%. All of the warrants vested immediately. The grant date fair value of the warrants issued was $1,332,000. The Company recorded $1,332,000 of stock-based compensation expense for the year ended October 31, 2022 based on the fair value of these warrants on the grant date.

At Closing, the Company also entered into 36-month consulting agreements with each of Skycrest and Greyt (each, a “Consulting Agreement,” and collectively, the “Consulting Agreements”), pursuant to which (a) Skycrest and Greyt will provide certain advisory services to the Company as more fully set forth therein; and (b) Skycrest and Greyt are being compensated for their services by the Company issuing to each of them at closing ten (10) year-warrants to purchase 750,000 Shares at an exercise price of $4.00 per Share (the “Consulting Agreement Warrants”), which Warrants are exercisable on a “cashless” basis. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 2.91%, (2) term of 10 years, (3) expected stock volatility of 144%, and (4) expected dividend rate of 0%. All of the warrants vested immediately. The grant date fair value of the warrants issued to Skycrest and Greyt was $2,940,000 and $2,940,000, respectively. The Company will amortize the costs associated with warrants issued over the term of the Consulting Agreement. The Company recorded $1,960,000 and $408,333 of stock-based compensation expense for the year ended October 31, 2023 and 2022, respectively, based on the fair value of these warrants on the grant date.

At Closing, Ian Bothwell waived all unpaid and accrued compensation except for four unpaid base salary payments outstanding as of July 31, 2022, in exchange for ten-year warrants to purchase 150,000 Shares at an exercise price of $4.00 per Share, exercisable on a “cashless basis” and a cash payment of $50,000 at Closing. All of the warrants vested immediately. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 2.91%, (2) term of 10 years, (3) expected stock volatility of 144%, and (4) expected dividend rate of 0%. The grant date fair value of the warrants issued to Mr. Bothwell was $588,000 which amount was applied towards the amount of unpaid and accrued compensation. The remaining balance of unpaid and accrued compensation that was forgiven by Mr. Bothwell totaling $455,478 was recorded as additional paid in capital as of October 31, 2022 (see Note 15).

At Closing, Dr. George Shapiro terminated his consulting arrangement with the Company and waived all unpaid consulting fee obligations in exchange for ten-year warrants to purchase 15,750 Shares at an exercise price of $4.00 per Share, exercisable on a “cashless basis.” All of the warrants vested immediately. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 2.91%, (2) term of 10 years, (3) expected stock volatility of 144%, and (4) expected dividend rate of 0%. The grant date fair value of the warrants issued to Dr. Shapiro was $61,740 which amount was applied towards the amount of unpaid and accrued compensation, The remaining balance of unpaid and accrued compensation that was forgiven by Dr. Shapiro totaling $77,760 was recorded as additional paid in capital as of October 31, 2022 (see Note 15).

During August 2022, the Company entered into five separate consulting and employment agreements providing for the issuance of ten-year warrants to purchase an aggregate of 205,750 Shares at exercise prices ranging from $4.80 to $6.00 per Share, exercisable on a “cashless basis”. The warrants vest over the term of the agreements that range for 6 months to 2 years. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rates between 2.60% - 3.05%, (2) term of 10 years, (3) expected stock volatility of 143%, and (4) expected dividend rate of 0%. The grant date aggregate fair value of all the warrants issued was $1,122,075. The Company recorded an aggregate of $237,638 and $133,363 of stock-based compensation expense for the years ended October 31, 2023 and 2022, respectively, based on the fair value of these warrants on the grant date.

During September 2022, each of the five non-executive directors (other than the Chairman) were granted the right to be party to a Director’s Service Agreement. Pursuant to that agreement, non-employee directors will be compensated for their services by the annual issuance of warrants to acquire up to 5,000 shares of the Company’s common stock at an exercise price of $8.80 (the fair market value of the common stock as of the date of grant, exercisable for a period of ten (10) years from the date of grant (“Director Warrants”). The Director Warrants shall be and shall vest in equal monthly installments of 416.67 shares, subject to continued service by the director as a member of the board of directors. The agreement will also provide for indemnification of directors to the fullest extent permitted by Nevada law. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 3.69%, (2) term of 10 years, (3) expected stock volatility of 143%, and (4) expected dividend rate of 0%. The grant date fair value of each warrant issued was $43,200 (aggregate total of $216,000). The Company recorded an aggregate of $160,373 and $23,079 of stock-based compensation expense for the years ended October 31, 2023 and 2022, respectively, based on the fair value of these warrants on the grant date.

Effective August 1, 2022, the Company entered into a one-year consulting agreement with a third party to provide strategic advice, assistance with implementation of new business strategies and overall advice concerning the Company’s business goals and objectives. The consultant received compensation in the form of a warrant to acquire up to 5,000 shares of the Company’s common stock at an exercise price of $6.60 (the fair market value of the common stock as of the date of grant, exercisable for a period of ten (10) years from the date of grant and exercisable on a “cashless basis.” The warrant shall vest in equal monthly installments. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 2.60%, (2) term of 10 years, (3) expected stock volatility of 143%, and (4) expected dividend rate of 0%. The grant date fair value of the warrant issued was $32,700. The Company will record stock-based compensation expense during the term of the agreement based on the fair value of these warrants on the grant date. The Company recorded $24,525 and $8,175 of stock-based compensation expense for the years ended October 31, 2023 and 2022, respectively.

As described in Note 11, in connection with the issuance of the Note on March 6, 2023, the Company issued the Purchaser’s 50,000 commitment Warrant Shares exercisable for a five-year period at a price of $12.00 per share. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 3.98%, (2) term of 5 years, (3) expected stock volatility of 169%, and (4) expected dividend rate of 0%. All of the warrants vested immediately. The grant date fair value of the warrants issued was $113,000. The Company recorded $113,000 as a loan discount which was amortized over the term of the Note.

As described in Note 15, effective June 1, 2023, the Company issued Dr. Leider a warrant to purchase an aggregate of 285,000 shares of common stock in connection with Dr. Leider’s employment agreement. The warrant is exercisable for $2.40 per share (the closing price of the Company’s common stock on the date of grant), until the fifth anniversary date of the date of issuance. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 3.7%, (2) term of 5 years, (3) expected stock volatility of 168%, and (4) expected dividend rate of 0%. The warrant vests in equal quarterly installments over a three-year period. The grant date fair value of the warrants issued was $684,000. The Company recorded $95,000 of stock-based compensation expense for the year ended October 31, 2023 based on the fair value of these warrants on the grant date.

As described in Note 15, effective June 1, 2023, the Company issued Dr. Golub a warrant to purchase an aggregate of 250,000 shares of common stock in connection with Dr. Golub’s employment agreement. The warrant is exercisable for $2.40 per share (the closing price of the Company’s common stock on the date of grant), until the fifth anniversary date of the date of issuance. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 3.7%, (2) term of 5 years, (3) expected stock volatility of 168%, and (4) expected dividend rate of 0%. The warrant vests in equal quarterly installments over a one-year period. The grant date fair value of the warrants issued was $600,000. The Company recorded $250,000 of stock-based compensation expense for the year ended October 31, 2023 based on the fair value of these warrants on the grant date.

As described in Note 15, effective July 12, 2023, the Company issued Ms. Swartz a warrant to purchase an aggregate of 130,000 shares of common stock in connection with Ms. Swartz’s employment agreement. The warrant is exercisable for $2.28 per share (the closing price of the Company’s common stock on the date of grant), until the fifth anniversary date of the date of issuance. The Company valued the warrants on the dates of the grant using the Black-Scholes option pricing model with the following weighted average assumptions: (1) risk free interest rate 4.1%, (2) term of 5 years, (3) expected stock volatility of 167%, and (4) expected dividend rate of 0%. The warrant vests over a three-year period. The grant date fair value of the warrants issued was $296,400. The Company recorded $28,817 of stock-based compensation expense for the year ended October 31, 2023 based on the fair value of these warrants on the grant date.

As described in Note 11, during the period August 2023 through September 2023, the Company sold 2.9 Units (“Units”) to 4 investors in a private offering at a purchase price of $250,000 per Unit for an aggregate purchase price of $725,000. Each Unit consists of (a) a $250,000 in principal amount 8% Convertible Promissory Note due September 30, 2026 (the “Note”); and (b) 7,813 common stock purchase warrants (the “Warrants”), each entitling the holder to purchase one share of common stock, $0.001 par value (“Shares”) at an exercise price of $20.00 for a period of five years from the date of issuance.

As of October 31, 2023, there was approximately $4,881,000 of unamortized compensation associated with warrants outstanding as of October 31, 2023 that will be amortized over their respective remaining service periods.

All stock compensation expense is classified under general and administrative expenses in the consolidated statements of operations.